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BHP (ASX:BHP), the world's largest mining company, has issued a warning about the growing global adoption of artificial intelligence (AI), not because of potential risks to humanity, but due to the massive energy-intensive computing demands that could significantly boost global copper consumption.
According to BHP's Chief Financial Officer, Vandita Pant, AI's increasing reliance on data centers could contribute to a surge in copper demand, projected to reach an additional 3.4 million tonnes annually by 2050. “Today, data centres are less than 1% of copper demand, but that is expected to be 6% to 7% by 2050,” Pant said in a statement to the Financial Times.
AI and Data Centers Drive Copper Consumption
With AI systems requiring extensive computational power and electricity, data centers—critical infrastructure supporting AI—are expected to become a major driver of copper usage. Although the data centers themselves may become less copper-intensive, the need to deliver electricity to these facilities will fuel the demand for the metal, according to BMO Capital Markets commodities analyst Colin Hamilton.
As BHP predicts, global copper demand could rise sharply, reaching 52.5 million tonnes per year by 2050, compared to 30.4 million tonnes in 2021, marking a 72% increase.
Race for Copper Intensifies
The predicted copper shortage has intensified competition among companies for access to copper-rich assets. Earlier this year, BHP finalized the purchase of OZ Minerals, marking its largest acquisition in a decade. The miner also attempted a $49 billion takeover of Anglo American, primarily driven by interest in its copper operations. A successful bid would have cemented BHP’s position as a dominant force in the copper market, pushing it far ahead of rivals, including Chilean state-owned Codelco.
Despite the failed Anglo bid, BHP continues to expand its copper portfolio. In July, it partnered with Lundin Mining (TSX:LUN) to acquire South America-focused Filo Corp. (TSX:FIL) in a $3 billion deal, securing key copper assets in Chile and Argentina.
Copper Shortages Looming
Copper inventories have been shrinking, with stockpiles in CME warehouses dropping 71% between late March and July 2023. Current inventories stand at 8,947 tonnes, the lowest since 2008. With new mines taking an average of 15 years to develop, supply struggles to keep pace with growing demand, further exacerbating concerns about future copper shortages.
